How to Handle Bank Closure

If your bank does fail, and you have less than $100,000 in a deposit account, “there is nothing to do,” Williams-Dickerson says. “The deposit will be assumed by another institution. As long as you are within the FDIC insurance limits…your money is fully protected. In the overwhelming majority of failures, the FDIC is able to find another bank to step in and take over the operations. In those cases, consumers have full access to their insured money the next business day. If the FDIC is unable to find a buyer, within 48 hours checks will be mailed out to customers for the insured amount of their deposits.”

If there is more than $100,000 in an account, a customer should contact the FDIC at the unique toll-free number provided for each failure, or they can log onto the FDIC Website the Monday following the failure. The FDIC’s Electronic Deposit Insurance Estimator (EDIE) can help customers determine whether or not their funds are fully covered.

The FDIC is also responsible for settling uninsured deposit accounts with the failed bank. If the failed bank is acquired by another bank, then I would direct you to the takeover bank, Gregory advises.

“Deposits in excess of the FDIC limit are unlikely to be fully recouped. Investors become creditors of the corporation and they may receive payouts as assets are liquidated,” says Bankrate’s McBride.

You can also protect yourself by structuring your accounts, says Williams-Dickerson. “Structure accounts to maximize coverage,” she says. If you have more than $100,000 at any one depository institution, the FDIC recommends using EDIE to help determine whether or not their funds are fully covered.” Another option is to have accounts at multiple banks. Deposit-placement services, known as Certificate of Deposit Account Registry Services, can help consumers and businesses put money in multiple institutions through one bank, all the while just getting one monthly bank statement.

National Small Business Association board chair, Marilyn Landis, advises “Be sure you have online service for all your accounts with your bank. If you get notice that your bank has suddenly closed, you can go online to determine the current status of all your accounts on that day — balances at that moment, checks still outstanding, etc. In most cases another bank will pick up your accounts — in the interim you will want to know which vendors to contact to avoid payment questions and you will want a record to use to be sure the new bank correctly records your accounts.”